Banks tackle shortage of coins
COLOMBO: Children are being encouraged to raid their piggy
banks in a bid to end a serious shortage of loose change.
State-owned banks are offering colour pencils, felt pens, drawing
paper and books to children who part with their savings in exchange for
bank notes, promising the gifts will be worth 20 percent more than the
coins handed in.
“If children break their piggy banks and bring the coins back to
circulation we will give exercise books and pens in addition to
returning the money in bank bills,” said State Revenue Minister Ranjith
Siymbalapitiya.
The offer of an extra 20 per cent in the form of gift coupons
coincided with the traditional new year last month and followed a major
shortage of coins essential for the cash-reliant transport and retail
sectors.
Minting cheaper steel coins plated with copper and nickel has not
helped, according to the Central Bank of Sri Lanka.
The Central Bank tried in 2001 to coax people to put unused coins
back into circulation by urging students to break into their piggy
banks, but the scheme flopped.
The Finance Ministry expects the added incentive this time round will
pay off.
The 20 percent premium has a resonance as prices have surged and the
island nation has seen older coins made with copper and nickel snapped
up for the metal.
Even commemorative gold and silver coins had been snapped up by
foundries to melt and make jewellery as the precious metals in the coins
was worth more than the face value of the coins themselves.
The Central Bank got wiser in July 2004 and briefly withdrew the
coins from sale before repricing them at the market value of the
precious metals. Yet, the 5,000 gold coins and 25,000 silver tokens had
been a sell out.
Jewellers said it made good business sense to melt down the coins,
albeit illegally, although no one would admit to doing so.
The less glamorous nickel and copper coins may find their way into
Sri Lankan homes, not by way of cash but as more expensive copper screws
used by the construction industry. Five and 10 cent copper coins are
almost extinct with only the cheaper aluminium replacements found
occasionally.
“You almost never get change money from bus conductors,” said local
businessman Chandra Wijesekera. “Their excuse is that they don’t have
change. We have a big shortage of small change.”
The coin shortage is partly due to the older nickel coins being used
as washers. By drilling a hole in the middle, a coin is turned into a
washer that is a cheaper and more durable alternative to galvanised
steel washers used in motor vehicles.
Central Bank of Sri Lanka assistant governor Rose Cooray said small
denomination coins are no longer issued because the cost of minting them
is higher than the face value.
Sri Lanka does not make its own coins, instead getting supplies from
the Royal Mint of Britain, the Royal Canadian Mint or the Monnaie De
Paris of France.
Cooray declined to give the cost of minting, but said sharp rises in
base metals prices had rendered the traditional coins uneconomical and
the bank had opted for the cheaper plated coins from December 2005.
“We are saving about 600 million rupees (six million dollars) with
the new coins,” Cooray said.
“The earlier series of coins will also be legal tender but we won’t
mint them anymore.” Sri Lanka may also have lost some of its five rupee
coins to Britain where the coin is known to have fooled vending machines
to accept it as a one pound coin.
AFP |